Trade surplus hits record high

Commodity prices, weaker dollar help bring closer our first current account surplus since the 1970s.

Rising iron ore prices have helped boost Australia’s trade surplus.

Surging commodity prices and a weaker Australian dollar helped to lift Australia’s trade surplus to a record $5.745 billion in May, bringing closer the country’s first current account surplus since the 1970s.

The May result compared with a surplus of $4.820 billion in April, and was driven by a 13 per cent rise in prices of commodities such as iron ore, the Australian Bureau of Statistics said. The value of exports rose by 4 per cent, while imports rose by 1 per cent.

Prices for Australia’s biggest exports have surged over recent months, with iron ore trading at its highest levels in 5 years as a result of global supply disruptions.

The Australian dollar has also declined this year as the Reserve Bank of Australia moved to cut official interest rates for the first time since 2016.

The RBA lowered its official cash rate to a record low 1 per cent from 1.25 per cent yesterday, with Governor Philip Lowe indicating he is prepared to cut again if slack in the job market remains elevated and inflation stays moribund.

The Australian dollar now trades below US70c, compared to U75c a year ago.

Dow Jones Newswires